Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (34 page)

Amway denounced the news reports and threatened to file a $500 million libel suit against the
Free Press
. But the next year, the company released a terse statement announcing that it had pleaded guilty to defrauding the Canadian government and would pay a $20 million fine. In exchange, the plea agreement called for criminal charges to be dropped against four of the company’s top executives, including DeVos and Van Andel.
In 1989, Amway paid an additional $38 million to settle a related civil suit.

DeVos was soon dethroned as the RNC’s finance chair. His standing hadn’t been helped by his reference to the brutal 1982 economic recession as a welcome “cleansing process” or by his insistence that he’d never seen an unemployed person who wanted to work. Top donors were also put off by his attempts to transform RNC meetings into patriotic pep rallies akin to those run for Amway salesmen. DeVos would call wealthy contributors to the stage and ask, “Why are you proud to be an American?” A longtime Republican activist told
The Washington Post
, “
We were losing contributions and that was the last straw.”

The DeVos family nonetheless remained huge financiers of the Republican Party and the growing conservative movement, as well as sponsoring efforts to undo campaign-finance laws. Starting in 1970, they began to direct at least $200 million into virtually every branch of the New Right’s infrastructure, from think tanks like the Heritage Foundation to academic organizations such as the Intercollegiate Studies Institute, which funded conservative publications on college campuses. “
There’s not a Republican president or presidential candidate in the last fifty years who hasn’t known the DeVoses,” Saul Anuzis, a former chairman of the Michigan Republican Party, said.

The DeVoses were also deeply involved in the secretive Council for National Policy, described by
The New York Times
as “
a little-known club of a few hundred of the most powerful conservatives in the country,” which it said “met behind closed doors in undisclosed locations for a confidential conference” three times a year. Membership lists were secret, but among the names tied to the organization were Jerry Falwell, Phyllis Schlafly, Pat Robertson, and Wayne LaPierre of the National Rifle Association (NRA). There was overlap with a number of other participants in the Koch seminars, too, including Foster Friess, the multimillionaire founder of a Wyoming mutual fund, Friess Associates, who had collaborated politically with the Kochs at least since the 1996 election, when they both channeled money into Triad Management to surreptitiously fund attack ads. Charles Koch accepted an award from the Council for National Policy but was not a member of the group. It was, in Richard DeVos’s phrase, a place that brought together “
the doers with the donors.”

If anything, the DeVos family’s brushes with the law merely emboldened them. During the 1994 midterm elections, Amway gave $2.5 million to the Republican Party, which was the largest known soft money donation from a corporation in the country’s history. In 1996, clean-government groups criticized the family for skirting campaign contribution limits by also donating $1.3 million to the San Diego tourist bureau to help air the Republican National Convention there that year.

By then, Richard DeVos Sr. had bought the NBA’s Orlando Magic and had passed the management of Amway on to his son Richard junior, who was known as Dick. The younger DeVos shared his father’s political and religious views. But he was a pragmatist when it came to business, expanding the zealously free-market company deeply into China. By 2006, fully a third of Amway’s revenue came from the Communist state.

The DeVos family’s stature and wealth were magnified by Dick’s marriage to the other royal family of Michigan’s Dutch Reformed community, Betsy Prince.
Her father, Edgar Prince, had founded an auto parts manufacturing company that sold for $1.35 billion in cash in 1996. Her brother Erik Prince, meanwhile, founded the global security firm Blackwater, which the reporter Jeremy Scahill described as “
the world’s most powerful mercenary army.”

Betsy DeVos, who eventually became the chairwoman of Michigan’s Republican Party, was said to be every bit as politically ambitious as her husband, if not more so. With her support, in 2002 Dick DeVos ceased managing Amway in order to devote more time to his political career. The results, though, were dismal. The DeVos family spent over $2 million in 2000 on a Michigan school voucher referendum that was defeated by 68 percent of the voters. The family then spent $35 million in 2006 on Dick DeVos’s unsuccessful bid to become the state’s governor.

In their zeal to implement their conservative vision, few issues were more central to the DeVos family’s mission than eradicating restraints on political spending. For years, the family funded legal challenges to various campaign-finance laws. Ground zero in this fight was the James Madison Center for Free Speech, of which Betsy DeVos became a founding board member in 1997. The nonprofit organization’s sole goal was to end all legal restrictions on money in politics. Its honorary chairman was Senator Mitch McConnell, a savvy and prodigious fund-raiser.

Conservatives cast their opposition to campaign-finance restrictions as a principled defense of free speech, but McConnell, who was one of the cause’s biggest champions, had occasionally revealed a more partisan motive. As a Republican running for office in Kentucky in the 1970s, when it was almost solidly Democratic, he once admitted “
a spending edge is the only thing that gives a Republican a chance to compete.” He had once opened a college class by writing on the blackboard the three ingredients that he felt were necessary to build a political party: “
Money, money, money.” In a Senate debate on proposed campaign-finance restrictions, McConnell reportedly told colleagues, “
If we stop this thing, we can control the institution for the next twenty years.”

The James Madison Center aimed to make this dream a reality by taking the fight to the courts. In addition to the DeVos family, early donors included several of the most powerful groups on the right, such as the Christian Coalition and the NRA. But the driving force behind the organization was a single-minded lawyer from Terre Haute, Indiana, James Bopp Jr., who was general counsel to the antiabortion National Right to Life Committee. Bopp also became the Madison Center’s general counsel.

In fact, Bopp’s law firm and the James Madison Center had the same office address and phone number, and although Bopp listed himself as an outside contractor to the center, virtually every dollar from donors went to his firm. By designating itself a nonprofit charitable group, though, the Madison Center enabled the DeVos Family Foundation and other supporters to take tax deductions for subsidizing long-shot lawsuits that might never have been attempted otherwise. “
The relationship between this organization and Bopp’s law firm is such that there really is no charity,” observed Marcus Owens, a Washington lawyer who formerly oversaw tax-exempt groups for the Internal Revenue Service. “I’ve never heard of this sort of captive charity/foundation funding of a particular law firm before.”

In 1997, the same year that she helped found the Madison Center, Betsy DeVos explained her opposition to campaign-finance restrictions. At the time, there was a national outcry against the way both the Democratic and the Republican Parties had evaded contribution limits in the 1996 presidential campaign by paying for what they claimed were “issue” ads rather than campaign ads, with unlimited funds that came to be known as
soft money. There was a bipartisan Senate push for reform. But in a guest column in the Capitol Hill newspaper
Roll Call
, DeVos defended the unlimited contributions.

“Soft money,” she wrote, was just “hard-earned American dollars that Big Brother has yet to find a way to control. That is all it is, nothing more.” She added, “I know a little something about soft money, as my family is the largest single contributor of soft money to the national Republican Party.” She said, “I have decided, however, to stop taking offense at the suggestion that we are buying influence. Now I simply concede the point. They are right. We do expect some things in return. We expect to foster a conservative governing philosophy consisting of limited government and respect for traditional American virtues. We expect a return on our investment; we expect a good and honest government. Furthermore, we expect the Republican Party to use the money to promote these policies, and yes, to win elections. People like us,” she concluded archly, “must surely be stopped.”

Most of the big donors fighting the campaign-finance restrictions were conservatives, but a few extraordinarily rich liberal Democrats belonged to this rarefied club, too.
In 2004, Democratic-aligned outside groups spent $185 million—more than twice what the Republican outside groups spent—in a failed effort to defeat George W. Bush’s reelection. Of this, $85 million came from just fourteen Democratic donors.
Leading the pack was the New York hedge fund magnate George Soros, an opponent of the U.S. invasion of Iraq who regarded President Bush as such a scourge that he vowed he would spend his entire $7 billion fortune to defeat him, if the result could be guaranteed. With the help of Democratic operatives, Soros funneled more than $27 million into the outside spending vehicle of choice that year, known as 527 groups. It was the same year that Republicans used the same mechanism to fund the “Swift Boat” attacks on John Kerry. Prior to
Citizens United
, such schemes were legally dubious at best. The Federal Election Commission ruled that the gargantuan outside spending schemes violated campaign-finance laws and imposed hefty fines on both the Democratic and the Republican perpetrators. Afterward, Soros remained active in ideological philanthropy, spending hundreds of millions to support a network of human rights and civil liberties groups, but he largely withdrew from spectacular campaign contributions.

If the DeVoses expected a “return on our investment” in the Madison Center, as Betsy had put it, they got one in the Supreme Court’s
Citizens United
decision. It “
was really Jim [Bopp]’s brainchild,” Richard L. Hasen, an expert on election law at Loyola Law School in Los Angeles told
The New York Times
. “He has manufactured these cases to present certain questions to the Supreme Court in a certain order and achieve a certain result,” said Hasen. “He is a litigation machine.”

Bopp agreed. “
We had a 10-year plan to take all this down,” he told the
Times
. “And if we do it right, I think we can pretty well dismantle the entire regulatory regime that is called campaign finance law.”

Such a statement would have seemed ludicrous just a few years earlier, and in fact, in the beginning, no one took Bopp seriously.
With his shaggy gray Beatles haircut and his dogmatic legal style, not to mention his extreme views, he was literally laughed at by one federal judge. At the time, he was arguing that a hyperbolic film attacking Hillary Clinton, who was running for president, deserved the same First Amendment protection as newscasts aired by CBS’s
60 Minutes
. The film, a screed called
Hillary: The Movie
, had been produced by Citizens United, an old right-wing group with a history of making vicious campaign ads. The question, as the Supreme Court interpreted it, was whether
Hillary: The Movie
was a protected form of speech or a corporate political donation by its backers, which could be regulated as a campaign donation.

Case by case, financed by wealthy donors who treated the cause as a tax-deductible charity, Bopp had battered away at the foundation of modern campaign-finance law. He had succeeded in part by using the liberals’ language of civil rights and free speech against their own practices. The tactic was intentional.
Clint Bolick, a pioneer in the conservative legal movement whose group, the Institute for Justice, had received start-up funds from Charles Koch, had argued that the Right needed to combat the Left by asserting appealing “counter-rights” of its own. Thus
Citizens United
was cast as the right of corporations to exercise their free speech. As conservatives had hoped, the argument disarmed and divided the Left, even attracting the support of traditionally liberal champions of the First Amendment.

While polls consistently showed that large majorities of the American public—both Republicans and Democrats—favored strict spending limits, the key challenges that led to dismantling the laws were initiated by an extraordinarily rich minority: the Kochs and their clique of ultra-wealthy conservative activists.

A close look at the
SpeechNow
case, for instance, the lower-court decision following quickly on the heels of
Citizens United
, leads right back to the same people. There was no organization called SpeechNow until several libertarian activists invented it solely for the purpose of challenging the spending limits. The suit was the brainchild of Eric O’Keefe, among others, the Wisconsin investor who had been a libertarian ally of the Kochs since working in David’s 1980 vice presidential campaign, which called for the end of campaign spending limits.

Leading the suit was Bradley Smith, a bright and radically antiregulatory lawyer who co-founded the conservative Center for Competitive Politics. He was a proponent of zero public disclosure of political spending and didn’t disclose his funders, but IRS records showed that in 2009 his center enjoyed support from several conservative foundations, including the Bradley Foundation. Smith’s career illustrated the way that the fortunes of conservative philanthropists cultivated and nurtured talent like his. He had been a scholar at Charles Koch’s Institute for Humane Studies before becoming the most outspoken foe of finance restrictions ever to chair the Federal Election Commission, the federal agency charged with policing campaign spending. His patrons for this key post were Mitch McConnell and the Cato Institute. As he acknowledged, “
I would not have been an FEC commissioner if not for Cato’s efforts to promote me on the Hill.”

Also essential to the
SpeechNow
suit was the Institute for Justice, the group founded with Charles Koch’s seed money.
The litigation, meanwhile, was underwritten heavily by Fred Young, a libertarian retiree in Wisconsin who made tens of millions of dollars by selling his father’s firm, Young Radiator Company, after outsourcing the jobs of unionized workers to non-union states. Young served on the boards of the Koch-backed Reason Foundation and Cato Institute and was yet another regular attendee at the Kochs’ donor summits.